Functional Beverage Market in Russia, 2021

October 8, 2021  •  David Pring-Mill

This approximately 24,000-word report aims to shed light on an important market, with over 200 aggregated quantitative insights about the Russian non-alcoholic beverage market as well as relevant consumer behaviors, commercial developments, and public policies.

While the report is mostly focused on beverages positioned as being “functional,” much of the material would also be useful for any consumer goods company attempting to introduce or more effectively market a healthy food or product within Russia.

A large amount of the information within this report is appearing in the English language for the first time. This report references and translates Russian information sources, including audio and video, that otherwise would not be easily accessed by Western executives.

Market research today suffers from a credibility problem, with wide-ranging forecasts of the same markets and incomplete assessments of the key drivers. Policy2050 presents data from different sources, so you can see how it compares, and more importantly, tells the story behind the numbers. We connect the dots so that your organization can win.

In terms of beverage export markets, this means knowing where your product is most relevant and how it can be repackaged, reformulated, or rebranded to gain even more relevance. The Russian market is potentially lucrative but it carries a high degree of risks and requires a high degree of patience. Processes might be more protracted and less defined or transparent. The business climate is still impacted by politics and oligarchies.

With careful attention to detail, Policy2050 helps to guide strategic decision-making. This report is structured as follows:

  • Introduction to the Functional Beverage Market in Russia: An introduction and executive summary sets the stage for the functional beverage market in Russia.
  • Drivers of a Healthy Lifestyle: This section identifies the key drivers that could increase functional beverage consumption in Russia over the long-term. For ease-of-use, the report breaks down data that may be valuable to makers of beverage products positioned as beauty drinks, beverages with potentially immunity-boosting properties, energy drinks/nootropic beverages, and calming beverages.
  • Better Product, Higher Prices? This section looks at the viability of switching from higher volumes to higher perceived value across Russian beverage aisles, brick-and-mortar or virtual. This is prefaced with a summary of the financial performance associated with recent CPG industry evolutions.

    On a global basis, Red Bull probably helped to reframe the way that consumers think about pricing, volume, and functional benefit but the Russian market is unique as it seems to be periodically hit with financial crises, the most recent being COVID-19. These economic setbacks have included levels of inflation that psychologically scarred some Russian consumers and encouraged habits of practical spending, if not frugality. Pre-COVID, many Russians were already concerned about an increase in food prices.
  • Digital Trends of Russian Consumers: This section looks at Russian ecommerce, new distribution options, barriers to digital adoption, and the fast growth in smart lockers.
  • The Challenges of Doing Business in Russia: This section lists off the compelling reasons to export in general. It outlines the customized approach that is required for Russia, and details the very significant political and economic risks associated with this market.
  • Russia and China, Trends Comparison: This section notes the congruent economic interests of these two countries and the ways that they align with the financial interests of multinational corporations. These markets have many similarities but there are also many subtle yet significant cultural differences.
  • Category Opportunities and Trends: Finally, and most importantly (from a commercial perspective), this section identifies the functional beverage opportunities and trends that stand out on the Russian market. These insights are useful for product development and the marketing of products in Russia.

This report will provide comprehensive answers to the following key questions:

  • What quantitative and qualitative insights illuminate the unique characteristics and categories of the Russian beverage market?
  • How has the pandemic affected product interests and consumer behaviors?
  • What are the unique cultural attributes of the Russian beverage market? How are these factored into marketing strategies?
  • How should product evolutions and socioeconomic conditions be factored into pricing strategies?
  • What is the status of digital adoption and infrastructure in Russia?
  • What is the impact of politics on the risks and opportunities in the Russian beverage market?
  • How should multinational companies manage the relationships that are essential to success in Russia and prepare for possible legal complications?
  • What are the similarities and differences between the Russian and Chinese export markets?
  • How have lingering impressions and associations from the USSR affected perceptions of consumer goods and consumer behaviors?
  • How have inflation fears in Russia shifted consumers’ focus to value, and how is ecommerce enabling them to more carefully sort and scrutinize beverage products?
  • What should multinational consumer goods companies know about Russian consumers’ general belief in natural, traditional, and fresh ingredients? How might this affect the market viability of existing products or new categories?
  • What are the unique drivers of water category consumption in Russia?
  • Why are energy drinks, and calming drinks, both capable of addressing the needs of Russian consumers, as indicated by surveys?
  • Why has the transition to plant-based milks been more limited, or delayed, in Russia?
  • How could functional beverages, especially functional dairy products, potentially address the nutritional and hydration needs of the elderly Russian population and align with public health programs?
  • How might local or iconic soft drink brands be successfully scaled or leveraged in the creation of new beverage categories?
  • How does seasonality affect the rate of consumption and quality of kvass?
  • Why are juice sales declining in Russia?

Above all else, Policy2050 reports aim to identify, analyze, and solve problems in ways that benefit society just as much as the bottom line.

For additional qualitative and quantitative insights, check out the Policy2050 companion reports:

“Consumer Trends, Diversification & Strategies in the Global Beverage Industry, 2021”

Opportunities and Risks in the Functional Beverage Market, 2021”

Target Audience

  • beverage companies of all sizes
  • health food manufacturers
  • professionals involved in Russian import/export activities, especially consumer packaged goods
  • grocery retail, ecommerce, distributors, and digital partners in Russia
  • investors and investment banks
  • public health organizations
  • government bodies and regulating authorities

Companies Mentioned in this Report

Companies, brands, and organizations mentioned in this report include:

  • PepsiCo
  • The Coca-Cola Company
  • Red Bull
  • Mars, Inc.
  • Multon
  • Sady Pridonya
  • Jeunesse
  • Dobry
  • Imunele
  • Laimon Fresh
  • Borjomi
  • Svyatoy Istochnik
  • Chernogolovka Sodas
  • Kvass brands
  • Magnit
  • X5 Retail Group
  • Yandex
  • VKontakte
  • PickPoint
  • Utkonos
  • Aliexpress Russia
  • DiDi
  • Paper Planes
  • GfK Rus
  • Mildberry
  • Ipsos
  • Albion Overseas
  • Frontier Strategy Group
  • Bass, Berry & Sims
  • All-Russian Dairy Research Institute
  • OPORA Russia Commission for the Development of the Soft Drinks Industry

Methodology

Policy2050 excels at identifying the strategies and patterns within complex data that is gathered through exhaustive secondary and primary research. This process includes publicly available sources, such as annual reports, academic journals, consumer surveys, trade publications, industry symposia, and podcasts, along with interviews and inputs from a wide network of market experts and internal knowledge. Strategic perspectives are leveraged from across the value chain and from relevant tech vendors causing disruptions or reconfigurations in markets.

Information is filtered and validated through this lens of expertise and scrutiny, or contextualized to expose differences in results and industry disagreements. Perceptions of current trends, as reflected in reporting, often translate into actions and investments with consequences. The many hyperlinks included throughout this report help to ensure that important figures, strategic statements, and other market characterizations are easily and fully traceable.

Over 75,000 words were translated from Russian into English to support the research process and leverage market-specific sources.

All of this analysis is delivered within an actionable framework that outlines best practices, proposes innovations or adaptations, and extracts insights from case studies. Infographics and imagery are used to express key concepts and enliven this comprehensive overview where appropriate.

Media Kit

The compressed file above contains a copy of the press release alongside infographics, which can be freely used by the news media with attribution. The online press release is visible here.

Inquiries can be directed to david.pringmill@policy2050.com.

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